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Personal Allowance Information

In the UK tax system, personal allowance is the level above which income tax is levied on an individual's annual income. A person who receives less than his/her personal allowance in taxable income (such as earnings and some benefits) in a given tax year does not pay income tax; otherwise, tax must be paid according to how much is earned above this level.

The personal allowance for the tax year 2007-08 for residents under 65 was £5225, and this was increased to £6035 for the tax year 2008-09.[1]

Certain residents are entitled to a larger personal allowance than this. These include the over 65s (followed by an increased allowance for over 75s) blind people, and married couples where at least one person in a marriage or civil partnership was born before 6 April 1935.

The Chancellor announced in May 2008 that the 2008-09 personal allowance would be increased by £600 from £5435 to £6035.[2] This was done to help low-income tax-payers affected by the abolition of the 10% starting rate of income tax. At the same time the threshold at which someone starts to pay higher rate tax was reduced by £600, so that higher rate tax payers would not benefit from the change. The change was implemented in September 2008. The enhanced personal allowance will be increased in 2009-10 to £6475.[1]

On 22 June 2010, The Chancellor (George Osborne) upped the Personal Allowance by £1000, in his Emergency Budget, making it £7475 for the 2011-12 tax year.[3]

Notes

  1. ^ a b "Rates and Allowances - Income Tax". HM Revenue & Customs. http://www.hmrc.gov.uk/rates/it.htm. Retrieved 2009-05-30.
  2. ^ "Full Statement - Tax Changes". BBC News. 2008-05-13. http://news.bbc.co.uk/1/hi/uk_politics/7399057.stm. Retrieved 2009-05-30.
  3. ^ "Emergency Budget 22 June 2010". HM Revenue & Customs. http://www.hmrc.gov.uk/budget2010/index.htm. Retrieved 2010-06-25.
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Categories: Income taxes | Personal taxes | Taxation in the United Kingdom |

 

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